This is reposted article published in JCK online magazine
Specialty jewelers are seeing their share of the market shrink, as other channels like online and mass merchants grab a larger slice of the pie, according to a new study of the U.S. diamond market from analyst Edahn Golan.
The report, which can be downloaded here, finds that in the last two years, specialty jewelers—defined as both independents and jewelry chains—held a 43 percent share of the market, compared to around 50 percent in the 1990s.
“The loss of market share is a long-term trend,” says Golan. “If you look at it on a year-over-year basis, sometimes there is good news because the market share improves. But on a long-term basis, you see specialty jewelers losing market share.”
Based on Jewelers Board of Trade and Census Bureau statistics, Golan calculates that the number of jewelry stores dropped 2.1 percent over the last year and has fallen 21 percent since 2007.
Despite this, he feels that independents still play a valuable role in the market.
“I would much rather go to a store where I know the owner and I can talk to them and I can go back three four years later and they know my name,” he says. “To me that’s worth a premium. The question for the independents is: How do they offer special service and make sure customers know that it’s there?”
The study also finds that millennials (defined here as ages 25 to 34) are now the predominant force in the jewelry market, spending an average of $786 per household, 28 percent more than other groups.
But they have different tastes than other buyers, Golan says.
“The trend is: Same but different,” he says. “Millennials may want an engagement ring, but it won’t necessarily be a diamond or a big center stone. It may have a different setting. It’s important retailers recognize they are catering to a group with different needs. But if they do cater to them, they will get their business.”
Other noteworthy facts from the report:
– The holiday season is still the most wonderful time of the year for jewelry sales, though its importance has lessened (a bit). In 2014, it accounted for 26.4 percent—about a quarter—of all industry revenue. Between 1992 and 2007, it averaged 32 percent—about one-third—of jewelry sales.
– U.S. fine jewelry sales totaled $68.8 billion in 2014, a 1.4 percent increase over the prior year, and a record.
– Watch sales did better last year, hitting $9.13 billion, a 7.7 percent jump.